Fintech solutions by their very nature should deliver increased efficiencies, faster processes, and more streamlined transactions shares Nick Cowan, CEO of the GSX Group in this Global FinTech Series interview. Catch the complete story to uncover some more insights and observations on the evolving capital markets and finance tech segment.
Hi Nick! Can you tell us a little about yourself, what has your journey in Capital Markets/FinTech been like so far? Could you share some of the biggest evolutions (in terms of tech/trends) you’ve seen take place over the years?
I’ve been lucky enough to have had some great opportunities during my 35 enjoyable years in financial markets, including being sent to Tokyo at 23 as a derivatives trader for 3 years, to learn how to trade properly at Bear Stearns, to then being appointed as the Global Head of Trading at ING Barings in the ‘post- Leeson’ era, before being appointed the Head of Equities and Board Member at the same company (at 33…..crazy times!). This was an amazing opportunity to be able to run a large business and gain so much experience at such a young age. During this 5 year period – we operated in about 43 countries with around 2,500 staff in sales, trading and research of equities, derivatives and convertible bonds. Working at an investment bank, helping issuers raise capital, to then have their securities trade on one of the 40 stock exchanges where we had membership, gives you first-hand experience as to how capital flows work. I really was very lucky. I then ran my own money as a professional trader for several years, putting to use some of the skills I had picked up along the way. Leaving one of the largest investment banks in the world to trade on your own with two screens was also a huge learning curve, and one that I still do today.
I was lucky enough to be asked to help a team form the GSX as Managing Director in 2012 and in November 2014 the GSX received its full licence before opening as Gibraltar’s first Stock Exchange. In 2017, we started to really focus on developing a strategy for trading digital securities and assets and has since become our number one priority.
In terms of the most noteworthy tech developments within the wider fintech ecosystem over the years, the deployment of blockchain technology has been a game changer from a range of perspectives. In fact, it has been one of the main strands of focus for the GSX Group over the last number of years, inspiring us to pursue our own blockchain innovation.”
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Given your expertise and experience in the finance/fintech industry, we’d love to know your thoughts on the current state of the (global) crypto market.
I think the mistake many people made was to expect an instant revolution powered by digital assets. Since the bitcoin price surge of December 2017, the crypto market has reverted back to a more sustainable and realistic pattern of growth. Mainstream adoption was never going to take place overnight, and steady progress is being made all the time, particularly in terms of the increased appetite for crypto exploration among financial institutions and central banks across the world.
In your views, how will tokenization of assets facilitate better/seamless trading?
The tokenization of assets effectively opens up frictionless trading. Currently, the FMI’s play a major role in ensuring the T+2 system operates, but we see this changing over the next few years. The biggest effect of T Instant will be the lower costs that can be achieved, both in the life cycle of a security trade as well as collateral. We also see counterparty risk as a major unresolved issue which will disappear. Finally, for issuers, pan-jurisdictional interoperability has the potential to open up greater liquidity pools, make illiquid assets more accessible, and ultimately help democratise capital markets. It also lowers the barriers to entry, broadening the global investor base and extending the geographical reach while also reducing settlement times.
What fintech innovations would you say can help transform global capital markets (how/why?).
Blockchain technology can transform capital markets by changing the manner in which securities are traded and settled. The traditional T+2 model for the settlement of securities is antiquated, particularly given the technological strides that have been made in recent years. Blockchain technology can reinvent this model, and streamline the settlement timeframe, which, in turn, will eliminate unnecessary counterparty risk.
While the fintech market grows, there is still a disconnect between capabilities and the ability of financial institutions to capitalize on finance tech in an optimized manner. What would you say are still impediments to the adoption/integration and use of fintech in the marketplace?
Financial institutions will always adapt where they see efficiencies – the challenge is the speed at which they can move given the different legacies in place. Revolut has proved that banks can move quickly, but their speed has been enhanced by them not having to overcome a legacy model, be it technology or business. Also, change is great unless it affects your existing business model, then there is often slippage whilst any internal issues are addressed. For example, even though there has been strong growth within the capital markets over the past number of years, the underlying infrastructure of traditional financial institutions has not developed materially, but this will change and it will change very quickly given the financial firepower they have to deploy.
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Could you share some of your top takeaways when it comes to hiring and building a strong sales and operations team for a young tech product/company in fintech?
When it comes to building a successful team I think the key is to define your culture as early as possible. A clear vision for the company coupled with the right culture really helps things move. Also, keep it simple – get people to do what they are good at – and build on that. It is important that employees are engaged in their work activity, deriving satisfaction from tasks and using their diverse skill sets while doing so. So accentuate the positives, play to your company’s strengths while simultaneously identifying the weaknesses and hire people who are best suited to those roles! You will move at exponential speed – which as a fintech (and perhaps also a disrupter) – you HAVE to in order to compete and thrive in a congested marketplace.
Could you talk about some of the other innovative fintech apps and platforms in the capital markets industry that according to you are set to be new game-changers for this niche?
Just last week Revolut launched their own unique crypto feature, a further sign of increased mainstream acceptance and adoption of cryptocurrencies globally. These kinds of breakthroughs are hugely significant in terms of bringing new users into the fold, and giving them the opportunity to explore cryptocurrencies via a familiar platform. In terms of other platforms transforming capital markets, I have to of course talk about our own blockchain solution – the GSX STACS platform which we have developed specifically to help us achieve our vision of delivering digital securities trading this year – a blockchain powered by our GATE utility token. We are firmly of the view that our integrated digital exchange and CSD on STACS will accelerate the digitisation and tokenization of traditional financial and securities markets. Truly breathtaking technology.
What are some of the top must-have key-features that every fintech app/solution should offer their B2B clients?
Fintech solutions by their nature should deliver increased efficiencies, faster processes, and more streamlined transactions. Apps that prioritize user security, regulatory compliance, cost mitigation, and user experience have the best chance of gaining traction among users in the long term.
Tag (mention/write about) the one person in the fintech industry whose answers to these questions you would love to read!
James Wallace, VP & Principal Business Strategist, Federated Investors.
Your favorite FinanceTech quote
I was dumb enough to do a few Ironman triathlons – call it a mid-life crisis! – and after you have completed your 3.8 km sea swim and a 180 km bike ride, you have to put your trainers on and think about completing the marathon, when you’re in a state of pure exhaustion. With that in mind, my favorite quotes are: ‘Never give up, EVER’; ‘Nothing is impossible’; ‘From failure comes strength’;……seriously – do not be afraid of failing! And finally, ‘regret what you did, not what you didn’t do’!
Finally, ‘Fortune favors the brave’. It’s not a fintech specific quote, but one I think that should resonate with the global fintech community. Trailblazing uncharted territory can be daunting and there’s always an element of risk involved, but what a rewarding experience it is, to see your vision for innovation taking shape.
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